Unstable cable: Bankruptcy leads to jacked rates
When Ben Hicks, a manager at Orbit Billiards on the Corner, opened the restaurant's most recent Adelphia cable bill, his stomach fell faster than a scratched cue ball. Instead of the usual $48 in the "amount due" box, the figure was a heart-stopping $720.
Making the situation even worse, Hicks says, was Adelphia's response to his anguished call.
"They acted like it was no big deal," says an outraged Hicks. "We had no warning. I would have been freaking out weeks ago if we had."
After examining the bill closely, Hicks realized the bill was for two months of service. (He'd already paid his former lower rate for the first month.) After some calculating, Hicks figured his actual monthly bill had jumped by $331–a nearly 700% increase. Not exactly good news.
"I understand rate increases," Hicks says, "but this is ridiculous."
Adelphia's Lon Carruth, however, tells a different story.
"We called and contacted each commercial customer," Carruth insists. And Adelphia, which declared bankruptcy in June 2002, was between a rock and a hard place, Carruth says. As part of its bankruptcy proceeding, Adelphia underwent an audit and discovered it had been incorrectly charging some commercial accounts the residential rates.
"We didn't have a choice," says Carruth. He explains that powerful cable channels such as ESPN, the popular sports channel, demanded that Adelphia start collecting the higher commercial fees– or Adelphia would lose its license to broadcast ESPN.
"Adelphia is taking the heat," says Carruth, "but none of the money is going to Adelphia."
But that's not much consolation to restaurants still waiting to see how steep the fee hike will be.
Managers at Sloan's, South Street Brewery, and Chap's restaurant say they received mailed notice of the increase, though they haven't seen it reflected in their bills yet. And Starr Hill's Nikki Vinci says that though she heard about the increase at Orbit, Adelphia has not contacted her or anyone at Starr Hill directly. "We're just waiting for the next bill to come," Vinci says.
However, Jackie Heatherly, manager at Blue Bird Café on West Main Street, says she received two notices by mail and a follow-up phone call from Adelphia letting her know about the upcoming rate hike. "I feel I was treated fairly," she says.
But her rate hike was not nearly as extreme as Orbit's. Since the formula to determine commercial rates is based on seating capacity, Blue Bird's tiny bar area with seating for about 10 warranted only an approximately $100 monthly rate increase, a far cry from Orbit's more than $300 (Orbit can accommodate 355 patrons). Carruth declined to reveal the formula Adelphia uses, calling it proprietary information.
Why must commercial accounts cost so much? Carruth says restaurants routinely use television programs to lure customers in. Adelphia merely collects the fees and passes them along to the powerful channels.
Many institutions will not see their rates increase. For example, the downtown Charlottesville Post Office, although its lobby television is on constantly, wouldn't qualify, Carruth says, because it doesn't "use our services as a way of attracting or maintaining customers."
Over at DirecTV, a satellite television service that competes with Adelphia, programming costs have also risen "enormously" over the years, says spokesperson Robert Mercer. "We've only had three modest rate hikes– $2 per package– in the eight or nine years DirecTV has been in business."
As for Adelphia, Mercer says he had heard that the beleaguered cable company was previously charging its commercial customers a residential rate. "It certainly gives them a competitive edge," he says.
So what happens if other channels start making steep fee demands? Could commercial cable customers see their rates continue to rise? Carruth will only say, "We have taken care of the known deficiencies."
And as for the area customers who say they weren't notified of anything, Carruth has a quick response.
"You get mail everyday that you throw away without reading– my own measure is if it has a bulk postage rate."
But Orbit's Hicks says he received no such phone call or mail. "There's not a chance in hell I missed that notice," he says.Read more on: adelphia